Argentine water in demand amid gold, oil, gas rush

Alexander Wilson, Associated Press

Published 11:05 pm, Friday, September 30, 2011

Photo: Leonardo Petricio

Image 1of/3

Caption

Close

Image 1 of 3

In this picture taken Nov. 26, 2009, an oil worker walks toward an oil drill in the province of Neuquen, Argentina. Argentina is promoting a new era of mining and energy production, welcoming billions of dollars in foreign investment to unlock huge new reserves of natural gas, oil, gold, lithium and other metals once thought to be unprofitable or out of reach. But there's one factor threatening this resource boom, something politicians and energy executives rarely mention: Huge amounts of fresh water will be required to extract these resources, in a country where water scarcity has long held back development and 16 percent of households still aren't connected to publicly treated drinking water. (AP Photo/Leonardo Petricio) less

In this picture taken Nov. 26, 2009, an oil worker walks toward an oil drill in the province of Neuquen, Argentina. Argentina is promoting a new era of mining and energy production, welcoming billions of ... more

Photo: Leonardo Petricio

Image 2 of 3

In this picture taken Nov. 24, 2009, an oil worker works on an oil drill in the province of Neuquen, Argentina. Argentina is promoting a new era of mining and energy production, welcoming billions of dollars in foreign investment to unlock huge new reserves of natural gas, oil, gold, lithium and other metals once thought to be unprofitable or out of reach. But there's one factor threatening this resource boom, something politicians and energy executives rarely mention: Huge amounts of fresh water will be required to extract these resources, in a country where water scarcity has long held back development and 16 percent of households still aren't connected to publicly treated drinking water. (AP Photo/Leonardo Petricio) less

In this picture taken Nov. 24, 2009, an oil worker works on an oil drill in the province of Neuquen, Argentina. Argentina is promoting a new era of mining and energy production, welcoming billions of dollars in ... more

Photo: Leonardo Petricio

Image 3 of 3

Leonardo Petricio : Associated Press File
OIL, GOLD, GAS: Neuquen, Argentina, is one of the provinces where oil work is ongoing. The country is getting billions of dollars in foreign investment for natural resources. less

Leonardo Petricio : Associated Press File
OIL, GOLD, GAS: Neuquen, Argentina, is one of the provinces where oil work is ongoing. The country is getting billions of dollars in foreign investment for natural ... more

Photo: Leonardo Petricio

Argentine water in demand amid gold, oil, gas rush

1 / 3

Back to Gallery

BUENOS AIRES, Argentina - Argentina is promoting a new era of mining and energy production, welcoming billions of dollars in foreign investment to unlock huge new reserves of natural gas, oil, gold, lithium and other metals once thought to be unprofitable or out of reach.

But there's one factor threatening this resource boom, something politicians and energy executives rarely mention: Huge amounts of fresh water will be required for these operations in a country where water scarcity holds back development and 16 percent of households still lack connections to publicly treated drinking water.

To make good on the promised energy wealth from one large Argentine shale oil and natural gas deposit announced this year, experts say it could take an estimated 38 billion gallons of water, equal to the total daily amount of water supplied by public systems to the entire United States.

Highest-altitude mine

Other major projects include Pascua Lama, the world's highest-altitude gold mine, which is poised to open along the spine of the Andes and produce precious metals for 25 years. The rock will be processed on the Argentine side of the Chilean border with a mix of cyanide and 14 billion gallons of water, says the Canadian mining giant Barrick Gold Corp.

The company says it uses less than 1 percent of available river water for its gold mines.

But downstream in San Juan province, people already face water-use restrictions and must pay 99 times more for water than what Barrick Gold pays under a deal with provincial officials, said lawmaker Miguel Bonasso, who leads the Argentine congress's natural resources commission and sponsored a controversial Glacier Law that promises to create a scientific inventory of the nation's water resources.

"If Barrick Gold had to pay for this water, it wouldn't invest in the mine - it wouldn't be profitable," Bonasso said last week.

But most of the attention recently has focused on the discovery of a huge deposit of gas and oil trapped in shale rock deep under the Vaca Muerta ("Dead Cow" in English) basin of Neuquen province. While 90 percent of its key deposits are unexplored, Vaca Muerta could increase Argentina's oil reserves by at least 750 million barrels, and probably three times that much, said Michael Lynch, an oil analyst and president of Strategic Energy and Economic Research.

Natural gas, too

Vaca Muerta also has an estimated 4.5 trillion cubic feet of natural gas, according to Spain's Repsol-YPF energy company.

The discovery boosts the country's "technically recoverable" shale gas reserves to 774 trillion cubic feet, according to U.S. Department of Energy estimates, potentially making Argentina the world's third-largest provider of shale gas, behind China and the United States.

"It's more than important, because it will enable us to keep sustaining and promoting even more development for all Argentines," President Cristina Fernandez said when she announced the discovery earlier this year. She followed up in New York recently by securing $1.2 billion in promised investments from executives with Exxon Mobile Corp., AES Corp. and Apache Corp.

Long thought worthless, such deposits are now accessible through what is known as hydraulic fracturing and horizontal drilling, also known as fracking.

The process takes between 5 million and 6 million gallons of water per well, and it would take many thousands of wells to extract what they're hoping to produce, said Cornell University engineering professor Anthony R. Ingraffea.

In arid western Argentina, the water would have to be drawn from underground aquifers or from reservoirs and rivers fed by Andean snows and glaciers.